It'll never beat Nintendo and Sony. The iPod touch will actually need buttons for that. Not to mention Nintendo has already played around with the idea of tilt games (Kirby tilt and Tumble I think) for the original Gameboy. The problem with them is once you tilt to a certain degree, it begins to affect how much of the screen you can see.

Already companies have problem with tilt controls for turning (like for FPS). Though that problem can be fixed (I believe companies are already working on a solution for it). (right now it's to fast so when you tilt the screen your view literally flys across making it hard to aim properly).

It will be a device that you can play games on though. Just not enough to rival Nintendo or Sony (or maybe even not enough to threaten them). I see gaming on the iPod touch more like games people have on their cell phones (or the games we have on the tablet). At most it might chip a little out of Nintendo's "casual" market.